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Indian Express
30 minutes ago
- Indian Express
Corporate loan growth slows in April-June quarter as firms delay investments, shift to cheaper debt market
Corporate loan growth by domestic banks slowed down in the first quarter of FY26, as companies put off investment decisions. This was largely due to uncertainty around tariffs, weak demand that held back private capital spending, and a shift towards cheaper funding options in the corporate bond market. Additionally, many companies continued to reduce their debt levels, which further dampened loan demand. Between April and June 2025, bank lending to industries grew at the slowest pace in over three years, signalling muted credit demand from the corporate sector. According to RBI data, loans to industries — including micro, small, medium, and large enterprises — rose by 5.49 per cent year-on-year to Rs 39.32 lakh crore, marking the weakest growth since March 2022. In Q1 FY26, the country's largest lender, State Bank of India (SBI), reported a 5.7 per cent Y-o-Y growth in its corporate loan book, but saw a fall of 3 per cent on a Q-o-Q basis. Private sector lenders ICICI Bank and HDFC Bank posted Y-o-Y growth of 7.5 per cent and 1.7 per cent, respectively, in their corporate loan portfolios, but witnessed sequential declines of 1.4 per cent and 1.3 per cent, respectively. A banking analyst noted that this reflects a phase of growth without fresh investment in the economy. The industrial growth as measured by the Index of Industrial Production (IIP) slowed to 2 per cent in April-June 2025, compared to 4 per cent in the previous quarter. According to SBI chairman C S Setty, the tepid growth in the corporate loan book was mainly on account of delay in investment decisions by corporates due to uncertainties caused by the higher tariff announcement by US President Donald Trump in April this year, shift in borrowing from banks to other alternate sources and higher prepayments of loans by corporates. While state-run Bank of Baroda's corporate loan book expanded by 4.2 per cent Y-o-Y , it registered a sharp dip of 10.2 per cent Q-o-Q. Corporate advances of Union Bank of India and Bank of India rose 2.68 per cent and 4.49 per cent y-o-y, respectively, though their books declined 4.83 per cent and 1.5 per cent sequentially in April-June 2025 quarter. Canara Bank and Punjab National Bank's corporate book grew flat at 0.48 per cent and 1.1 per cent, respectively, on a Q-o-Q basis in June 2025 quarter. Bank of Baroda's chief economist Madan Sabnavis attributes weak credit demand from corporates to the slowdown in investments as companies await a revival in demand. The US President had initially announced to impose a 26 per cent tariff on imports of Indian goods, but later declared a 90-day pause, which resulted in corporates holding back on expansions and new investments. He subsequently doubled the tariff on India to 50 per cent. 'An important factor to consider is the uncertainty in terms of how these tariffs are going to play out and how quickly this is going to be addressed. Due to this uncertainty, a lot of investment decisions could be delayed and people will postpone their spending. This is the second order impact of tariffs,' Setty said during a press conference post the declaration of the Q1 FY26 results. Easing rates in the debt market following the Reserve Bank of India's (RBI) 100 basis points (bps) reduction in the repo rate since February has prompted corporates to shift from banks to debt market instruments. 'Some large corporates are accessing the commercial paper (CP) market to replace working capital limits. This is expected because there is a good amount of liquidity (in the CP market). The rates are much more affordable (in the CP market) compared to borrowing from banks,' Setty said. The lender has seen working capital limit utilisation by corporates in his bank falling to 58 per cent from 62 per cent in Q1 FY25. Total funds raised through CP increased to Rs 4.51 lakh crore in April-June 2025 quarter, compared Rs 3.8 lakh crore in same period of FY25, and Rs 4.38 lakh crore in January-March 2025 quarter, according to Besides CPs, companies are also tapping the corporate debt market for cheaper funds compared to bank loans, which has impacted corporate loan growth of banks. In the first quarter of the current fiscal, corporates mobilised Rs 3.42 lakh crore through private placement of bonds, data from showed. 'We believe that funds raised through the bond market are being largely used by corporates to support ongoing business needs rather than for long-term capital investment,' said Saswata Guha, senior director, Financial Institutions (Banks), Fitch Ratings. With access to cheaper funds through CP and corporate bond markets, along with strong cash flows, domestic corporates have continuously reduced their debt, resulting in slower corporate credit growth. 'Corporates having strong cash flows are deleveraging. So, the (credit) demand is not that much because there is a deleveraging happening on the corporate book,' Bank of Baroda's managing director and CEO, Debadatta Chand, said during an analyst meet for the quarter ended June 2025. Lenders have also become prudent in lending to corporates as they do not want to overexpose themselves while expanding their corporate loan book. 'Banks are mindful of risk-return tradeoff and focus on risk-adjusted returns which makes them quite sensitive to pricing. They are also mindful of concentration risk embedded in a corporate exposure,' said Fitch Ratings' Guha. 'While lenders are trying to be more prudent in ensuring that their risk-adjusted returns on corporate exposure are justified, they can do so because retail and small business lending continues to grow healthy,' he said. Banks are hopeful of a stronger growth in corporate advances from the third quarter of the current fiscal. While SBI expects its corporate loan book to grow by 10 per cent in Q3 of FY26, Bank of Baroda is confident of achieving a 9-10 per cent growth in the segment during FY26. 'The shift (for funding from banks to the debt market) has happened, but I think these shifts keep happening. Once the rates stabilize on the bank side, they (corporates) will come back to utilization (of their working capital limits),' the SBI Chairman said. Setty said SBI has a robust visibility on the corporate loan pipeline in terms of proposals under discussion, and on sanctions which are yet to be disbursed. The bank has a total corporate loan book pipeline of Rs 7 lakh crore. For large-scale capex-led funding requirements, corporates will have to return to the banks, as the bond market alone will not be adequate to fulfill those needs, Guha said.
Time of India
40 minutes ago
- Time of India
'Body language of beaten man': Martina Navratilova calls out Donald Trump following failed peace talks with Vladimir Putin
Martina Navratilova calls out Donald Trump following failed peace talks with Vladimir Putin (Image via Getty) Martina Navratilova, the tennis legend, spoke up on August 15, 2025, after the meeting between U.S. President Donald Trump and Russian President Vladimir Putin in Anchorage, Alaska, came without a peace deal. The meeting, held at Joint Base Elmendorf-Richardson, ended in a standstill. Trump walked away from reporters with no answers, and Martina said his posture looked like someone who had lost. She called him 'the body language of a beaten man.' This comment caught attention around the world. Martina Navratilova calls Donald Trump 'a beaten man' after Alaska summit with Vladimir Putin Martina Navratilova used a short, simple phrase to show what she thought. She wrote on X that the way Donald Trump walked away and avoided questions looked like a 'beaten man.' She saw him leaving the reporters, not giving answers, and that made her say what she felt. This reaction came right after the failed meeting in Anchorage on August 15, where Trump and Vladimir Putin talked for about three hours but could not agree on stopping the war in Ukraine. Donald Trump and Vladimir Putin fail to reach a Ukraine peace deal in Anchorage meeting On the same day and place, August 15, 2025, at Joint Base Elmendorf-Richardson in Anchorage, Alaska, Donald Trump met face to face with Vladimir Putin. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like India to host free stock market courses Mister Market Pro Undo They talked for hours but did not sign a deal to pause the war in Ukraine. Also Read: 'Trump Let This Convicted Killer Free': Martina Navratilova Criticizes Donald Trump After Venezuela Prisoner Swap Vladimir Putin said there was an 'understanding,' but Donald Trump said plainly , 'There's no deal until there's a deal.' After their talk, Donald Trump backed away from pushing for a cease-fire and seemed to support Russia's idea of a broader peace plan first. European leaders reacted fast. They welcomed Trump's attempt to talk, but said that Ukrainian President Volodymyr Zelenskyy must take part in any real talks. They stressed that Ukraine's land should not be decided without Ukraine being there. A Reuters source says Trump told Zelenskyy that Putin wants to freeze the current lines if Ukraine cedes Donetsk. Zelenskyy strongly said no. Catch Rani Rampal's inspiring story on Game On, Episode 4. Watch Here!
Time of India
an hour ago
- Time of India
Ursula ahead of Zelenskyy-Trump meet: Sanctions to continue until Putin comes to negotiating table
European Commission President Ursula von der Leyen said on Sunday (August 17) there can be no limits on Ukraine's armed forces or outside assistance. The European leader set out Europe's stance on a possible future Russia-Ukraine peace deal in a joint press conference with Ukrainian President Volodymyr Zelenskyy. Von der Leyen also announced preparations for the bloc's 19th sanctions package on Russia, which she said will be forthcoming in early September. European leaders are expected to join Zelenskyy at a summit in Washington on Monday (August 18) to discuss a possible peace plan between Ukraine and Russia. "It's important that Washington is with us," the Ukrainian leader said. Show more Show less
